Naufal Adam, 23, is a prime example. The corporate bank analyst has Rp 500 million (US$36,500) to put down as a deposit and plans to take out a five-year mortgage.

“I feel that renting an apartment or a boarding house is only a short-term solution. The value for money diminishes overtime, in comparison to buying a house, which could potentially increase in value,” said Naufal, who now lives with his parents in Bekasi, West Java, 25 kilometers from his office in Menteng, Central Jakarta.

His criteria for a house is also typical of young and productive millennials, according to the recent Property Outlook 2020 discussion forum organized by online property marketplace rumah123.com. Millennials want a house that is affordable, with easy access to the city center or within Greater Jakarta with close proximity to highways or commuter line stations.

Property developers and lenders are reshaping their business strategies to cater to millennials, born between 1980 and 2000, who constitute 24 percent of the country’s population of 268 million, Statistics Indonesia (BPS) data from 2019 shows. Millennials are also likely to account for 75 percent of the global workforce by 2025, according to the Deloitte Millennial (Generation Y) Survey.

“The millennial market is growing rapidly because the demographic is very big. Even though some do not have the capital to buy properties with high rates yet, in three to five years [their purchasing power] is going to be great,” said CEO of AKR Land Development Thomas Go on Thursday. 

AKR Land, a sister company of publicly listed fuel distributor PT AKR Corporindo, has developed the Grand Estate Marina (GEM) City in Gresik, East Java, targeted at millennials with houses starting from Rp 300 million. Thomas said in Gresik, millennials accounted for half of his company’s buyers.

In Jakarta, where AKR Land developed the AKR Gallery West office tower and residences in Kebon Jeruk, West Jakarta, 25 percent of AKR Land’s property buyers are millennials.

Other property giants from Ciputra Group to Sinarmas Land are also chasing the millennial market. At Ciputra’s Citra Maja Raya development in Lebak, Banten, landed houses are available starting from Rp 180 million, while at its Citra Sentul Raya housing complex in Sentul, West Java, prices start at Rp 660 million. Sinarmas is also building hundreds of 48 square meter houses in BSD City, with prices starting at Rp 800 million.

“No one wants to buy properties listed above Rp 2 billion,” said Arman Nukman from the Real Estate Indonesia (REI), during a panel discussion at Property Outlook 2020 on Thursday, adding that prices had to be below Rp 750 million to attract millennial buyers. 

Banks are also actively targeting the demographic by marketing their “millennial mortgage loan” products, which offer lower down payment rates and longer payment tenures, making the monthly installments less burdensome.  

State-owned lender Bank Tabungan Negara (BTN), for one, has channeled Rp 9.3 trillion in mortgage loans for over 27,500 housing units since October 2018. Its mortgage product KPR Gaess, a youthful  wordplay on “mortgage, guys”, is designed specifically for 21 to 35 year olds and offers a free admin fee, single digit interest rate, a 50 percent of provision discount and a 30-year loan tenure. 

Private lender CIMB Niaga also has its KPR Xtra Bisa. With down payments starting from 5 percent, a three-year fixed rate of 5.5 percent and a tenure of up to 25 years, the lender is looking to grow its customer base through the product. 

However, millennials are not only price-sensitive, they are also cautious about debt, according to a 2016 Goldman Sachs Global Investment Research report. The report also stated that millennials have a preference for experiences over material possession, an analysis that the country manager of rumah123.com, Maria Herawati Manik, brought up during the panel discussion. 

“The challenge is to convince them. Because their lifestyle is very experiential, this is a challenge to answer to their demands,” said Maria, adding that the generation was more interested in simple yet convertible living spaces — caring more for design than the amount of space. 

And with millennials being digital natives, convincing them requires a strong online presence and engagement, said Maria, encouraging businesses to step up their digital marketing game. 

She explained that as of 2019, online searches for housing had surged 27 percent on her site, dominated by people aged between 25 and 35. 

According to a rumah123.com consumer survey, there is an unmet appetite for affordable housing. For apartments, 44.3 percent of the demand is for apartments priced below Rp 300 million, yet only 30.4 percent of the supply caters to that demand. 

For houses, 16.5 percent of overall demand is for options below Rp 300 million but only 8.8 percent of the supply meets that criterion.

As proximity to public transportation also matters, transit-oriented developments, in which properties are clustered near highways, bus shelters or commuter line stations, will flourish in the years to come, property developers said. (ydp)